**STOCK
OPTION AGREEMENT,** entered
into on the 18 th day of
October, 2004, between **DCAP
GROUP, INC.** , a
Delaware corporation (the “Company”), and **JACK WILLIS** (the
“Optionee”).
 
 
 **WHEREAS** , the
Company has entered into an Employment Agreement with the Optionee (the
“Employment Agreement”) pursuant to which the Optionee is to perform certain
employment duties and services for the Company; and
 
 **WHEREAS** , the
Company desires to provide to the Optionee an additional incentive to promote
the success of the Company.
 
 **NOW,
THEREFORE** , in
consideration of the foregoing, the Company hereby grants to the Optionee the
right and option to purchase Common Shares of the Company under and pursuant to
the terms and conditions of the Company's 1998 Stock Option Plan (the “Plan”)
and upon the following terms and conditions:
 
 **1.**  **GRANT
OF OPTION** . The
Company hereby grants to the Optionee the right and option (the “Option”) to
purchase up to Seventy Thousand (70,000) Common Shares of the Company (the
“Option Shares”) during the following periods:
 
 (a)  All or
any part of Seventeen Thousand Five Hundred (17,500) Common Shares may be
purchased during the period commencing on the date hereof and terminating at
5:00 P.M. on October 18, 2009 (the “Expiration Date”).
 
 (b)  All or
any part of Seventeen Thousand Five Hundred (17,500) Common Shares may be
purchased during the period commencing on October 18, 2005 and terminating at
5:00 P.M. on the Expiration Date.
 
 (c)  All or
any part of Seventeen Thousand Five Hundred (17,500) Common Shares may be
purchased during the period commencing on October 18, 2006 and terminating at
5:00 P.M. on the Expiration Date.
 
 (d)  All or
any part of Seventeen Thousand Five Hundred (17,500) Common Shares may be
purchased during the period commencing on October 18, 2007 and terminating at
5:00 P.M. on the Expiration Date.
 
 2.   **NATURE
OF OPTION** . The
Option is intended to meet the requirements of Section 422 of the Internal
Revenue Code of 1986, as amended, relating to “incentive stock options” to the
maximum extent permitted by applicable law.
 
 **3.**  **EXERCISE
PRICE** . The
exercise price of each of the Option Shares shall be six dollars and thirty-five
cents ($6.35) (the “Option Price”).
  
 
 
 **4.**  **EXERCISE
OF OPTIONS** . The
Option shall be exercised in accordance with the provisions of the Plan. As soon
as practicable after the receipt of notice of exercise and payment of the Option
Price as provided for in the Plan, the Company shall tender to the Optionee a
certificate issued in the Optionee’s name evidencing the number of Option Shares
covered thereby.
 
 **5.**  **TRANSFERABILITY** . The
Option shall not be transferable other than by will or the laws of descent and
distribution and, during the Optionee’s lifetime, shall not be exercisable by
any person other than the Optionee.
 
 **6.**  **INCORPORATION
BY REFERENCE** . The
terms and conditions of the Plan are hereby incorporated by reference and made a
part hereof.
 
 **7.**  **NOTICES** . Any
notice or other communication given hereunder shall be deemed sufficient if in
writing and delivered personally or sent by facsimile transmission, overnight
mail or courier or registered or certified mail, return receipt requested,
postage prepaid, addressed to the Company at 1158 Broadway, Hewlett, New York
11557, Attention: Chief Executive Officer (fax number: (516) 295-7216), and to
the Optionee at the address set forth below or to such other address as either
party may hereafter designate in writing to the other party in accordance with
the provisions hereof. Notices shall be deemed to have been given on the date of
mailing or transmission, except notices of change of address, which shall be
deemed to have been given when received.
 
 **8.**  **BINDING
EFFECT** . This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective legal representatives, successors and assigns.
 
 **9.**  **ENTIRE
AGREEMENT** . This
Agreement, together with the Plan, contains the entire understanding of the
parties hereto with respect to the subject matter hereof and may be modified
only by an instrument executed by the party sought to be charged. No amendment
on the part of the Company shall be valid unless approved by its Board of
Directors.
 
 **10.**  **GOVERNING
LAW** . This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York, excluding choice of law rules thereof.
 
 **11.**  **EXECUTION
IN COUNTERPARTS** . This
Agreement may be executed in counterparts, each of which shall be deemed to be
an original, but both of which together shall constitute one and the same
instrument.
 
 **12.**  **FACSIMILE
SIGNATURES** .
Signatures hereon which are transmitted via facsimile shall be deemed original
signatures.
 
 **13.**  **REPRESENTATION
BY COUNSEL; INTERPRETATION** . The
Optionee acknowledges that he has been represented by counsel in connection with
this Agreement. Accordingly, any rule or law or any legal decision that would
require the interpretation of any claimed ambiguities in this Agreement against
the party that drafted it has no application and is expressly waived by the
Optionee. The provisions of this Agreement shall be interpreted in a reasonable
manner to give effect to the intent of the parties hereto.
  
 2
 **14.**  **HEADINGS** . The
headings and captions under sections and paragraphs of this Agreement are for
convenience of reference only and do not in any way modify, interpret or
construe the intent of the parties or affect any of the provisions of this
Agreement.
 
 **IN
WITNESS WHEREOF** , the
parties have executed this Agreement as of the day and year first above
written.
 
 **DCAP GROUP,
      INC.**By:
    /s/ Barry B.
    GoldsteinBarry
      B. Goldstein, President


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| | By:               | /s/ Jack Willis
| | Jack
      Willis

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